On September 16 and 17 of this year the Alexander Group hosted its first annual Sales Effectiveness Symposium on Cloud Sales. A group of over 30 practitioners from leading cloud companies gathered at LinkedIn’s offices in San Francisco to network, share ideas and learn how to solve the most vexing sales strategy problems and identify the next wave of challenges on the horizon for cloud sales.
At the Symposium we took the opportunity to share our Cloud Sales Viewpoint Briefing which outlines our thoughts on the mega-trends impacting cloud businesses and how sales forces at these companies are evolving. Technology is undergoing sweeping changes, and the shift to the cloud is the massive architectural shift of this decade. One example of how sales organizations are evolving is the change in sales roles to more effectively monetize the emerging recurring and utility revenue models so common in cloud companies today. As a result, sales leaders are taking on more responsibility for revenue delivery across the entire marketing, sales and support organizations. Accordingly, the title Chief Revenue Officer is becoming more commonplace.
The Symposium covered a wide range of topics across the entire sales function through a series of presentations and interactive roundtable discussions. However, participants zeroed in on three important themes that are impacting their ability to grow today:
Theme 1: Evolving Sales Jobs: As mentioned above, one of the key shifts in cloud go-to-market strategy is the evolution in sales jobs. We introduced the concept of Hunting in the Wild, Hunting in the Zoo and Farming the Base” at the Symposium. Revenue models are shifting away from large, perpetual license contracts and taking the form of small trial or freemium models that convert to initial beachhead deals. Cloud organizations are adopting a “land and expand” strategy to take that beachhead deal and gradually increase share of wallet. These shifts directly impact the primary selling motions. Progressive sales leaders are thinking about “continuous selling” and multiple ways to generate revenue in the form of acquisition, upsell, cross-sell, adoption and retention. Cloud sales roles must adapt and align with these objectives and activities.
Theme 2: Ramping up indirect channels: One question persistent during the Symposium was, “How are world-class cloud sales organizations harnessing indirect channels to maximize growth?” We explored this topic in our session on Cloud Channels. One thing is certain: There’s no silver bullet on how to best leverage partners to deliver growth. Today pure play cloud companies realize less than 10 percent of their revenue from partners. It seems that many partner entities have not adequately prepared for or adapted to cloud, resulting in a de-evolution of traditional software partners. But the sentiments across the board indicate that cloud companies anticipate greater partner involvement in the future – in particular, Referral Partners, VARs and SIs. Cloud companies are looking at new ways of leveraging partners, including the role of next-generation fulfillment and aggregation partners. In addition, non-traditional ecosystem partners can enhance the product and service value of the core service and deliver tremendous value by increasing the “stickiness” of cloud solutions. Lastly, partners are able to access difficult to reach markets by enlisting partners for “last mile” services.
Theme 3: Calibrating quotas and compensation: As expected, sales compensation was a popular topic for discussion. However, we did see a divergence between “born in the cloud” companies and traditional technology firms who are making the move to the cloud. For those born in the cloud, the sessions revolved around what peer cloud companies are easuring in their sales compensation plans as well as how to solve complex sales crediting issues. For the traditional technology firms selling both on-premise and cloud-based offerings, the hot topics were quota setting in a mixed revenue world and insights from other recurring revenue models. Regardless of business model, all attendees were concerned with the shift of business away from perpetual or committed subscriptions and what the introduction of utility-based revenue models would have on their compensation plans.
To help you progress your thinking about sales strategy within cloud sales organizations, we have made the content from the Symposium available for viewing and download in the form of eBooks from the Alexander Group website. We encourage you to view, share, download and discuss these eBooks with your colleagues. We also plan to continue our exploration of these topics through a series of upcoming articles here on the Chief Sales Digest.
We hope to welcome returning and new attendees to our event next year. Stay tuned for details! In the interim, we encourage you to join our Cloud Sales Effectiveness Symposium group on LinkedIn. The purpose of the group is to share ideas and best practices, ask questions of your peers and network with other practitioners.
In the meantime, if you have questions on the content shared at the Symposium or just want to know more about how the Alexander Group can help you tackle your cloud go-to-market challenges, please contact us through our website.
Originally published by: Dale Chang